Overdrafts

The Gulfport, Mississippi, bank is joining a number of large and regional banks pledging to reduce or eliminate the charges.

Buffalo, New York-based M&T is the latest bank to announce changes that will save customers money but also reduce service-fee revenue.

Toronto-Dominion Bank’s U.S. retail banking unit is eliminating charges for overdrafts of $50 or less, joining a parade of lenders revamping their fees amid criticism from politicians, regulators and consumer advocates.

The North Carolina company will also eliminate nonsufficient-funds fees as it aims to keep pace with larger rivals, including Bank of America, that have revised their overdraft policies.

Challenger banks like Chime and Dave have been helping customers avoid overdraft fees for years. As traditional banks start to do the same, the fintechs say they still offer consumers a better deal.

Banks that help customers avoid missing important payments are providing a valuable service for which they should be compensated. Though some banks use deceptive practices, customers are willing to pay for a transparent service.

Diane Morais, the bank's consumer and commercial banking president, writes that eliminating overdrafts has had little impact on the bottom line, and she encourages more banks to do the same.

Overdraft fees are criticized as unfair penalties for lower-income customers, but they are often better for consumers than getting purchases rejected.

As PNC's head of retail banking, Karen Larrimer oversaw the development of a new service that alerts customers when account balances are in danger of falling below zero.

Consumer advocates have long wanted to restrict banks' ability to collect overdraft fees. The Empire State's new law represents a small but consequential breakthrough as they push for nationwide reform.